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Rick's Cabaret smacked down for stiffing dancers on minimum wage

Rick's Cabaret International, operator of the gentlemen’s club here in Minneapolis and others nationwide, could be facing substantial liability in a class-action lawsuit brought by more than 1,900 current and former exotic dancers at its Manhattan location. Other Rick’s Cabarets had better evaluate their own policies or they could find themselves facing lawsuits, as well.

The class action claimed that the club’s payment policies resulted in minimum wage violations and tip skimming, which violate both the Fair Labor Standards Act and New York law. Rick’s achieved that largely by misclassifying the dancers as independent contractors instead of employees.

The dancers sued the corporate operators of the Manhattan club, Peregrine Enterprises and RCI Entertainment, along with Rick’s Cabaret International. After nearly four years of litigation, a judge ruled that the corporations clearly committed the minimum wage violations and misappropriated the dancers’ tips.

The case isn’t over. The total owed to the dancers has not been determined. Even when it is, how much each corporation should pay must be established. Further, the dancers charge that the corporations willfully violated the law, which would double the damages. A second trial may be necessary.

The fact that exotic dancers are legally employees, not independent contractors, is not a revelation. Numerous state and federal courts have already ruled on the issue in litigation dating back to the Clinton administration.

In this case, the club’s arguments to the contrary seem to be new variations on a well-worn theme. Their tips for lap or table dances and private room encounters were called “performance fees,” and the dancers received less when patrons paid by credit card. Far from having artistic control over their shows like independent contractors would, virtually every detail of their costumes, performances and on-site behavior was strictly regulated by the club.

In a 65-page opinion, the judge eviscerated those arguments, citing precedent from the 5th Circuit Court of Appeals. The payment policy was illegal and resulted in over 87 percent of the dancers earning less than the minimum wage for at least one week -- some of them every week.

“This ruling is particularly important for women who work in the world of adult entertainment, where workers are often vulnerable and willing to work in illegal circumstances out of desperation," said one of the lead plaintiffs. “It's my sincere hope that cases that address this issue will inform women in this industry of this issue.”

Source: Courthouse News Service, “Make It Rain Minimum Wage at Rick's Cabaret,” Adam Klasfeld, Sept. 11, 2013

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